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HMRC internal manual

Enquiry Manual

Working the enquiry: reviewing earlier years: outstanding returns - action to take including determination of tax

Outstanding tax returns

During the course of an enquiry

  • you may need to issue notices to file or returns for earlier years where there has been a failure to notify, or
  • notices to file or returns that were issued before you opened the enquiry that may still be outstanding.

Taxpayers are now able to complete an online iForm to advise us that they do not need to complete a return for a specific year or that they no longer need to be in self assessment. To inhibit any action following the completion of this form during an enquiry, you must set the Automatic Closure Inhibited (ACI) signal on the self assessment.   

The ACI signal can be set from the dropdown menu in ‘amend taxpayer signals’. The entry should be changed to’ Y’ and the OK button selected to set the signal. You must also make an SA note using the following text

‘ACI signal set because returns for yy/yy to yy/yy have been issued for compliance purposes because [give the relevant reason]. It will be removed when the returns have been received.’ 

Once all the relevant returns have been received, you should cancel the inhibit signal and SA Note.

Where a return has not been filed by the relevant filing date you will need to consider whether a determination is appropriate. 

Considering whether a determination is appropriate

Where a tax return is not delivered to HMRC by the appropriate filing date it is possible to make a determination of the tax due under S28C TMA 1970. Although a determination is an estimate, it must be made ‘to the best … information and belief’ of the officer making the determination under S28C (1A) TMA70.

  • Only Debt Management and Banking (DMB) can issue a determination.
  • Caseworkers ask DMB to make the determination and are responsible for making sure that the amount to be determined is to the best of their information and belief.

You can only ask DMB to issue a determination if

  • a notice to file or a return has been issued, and
  • the due date for filing the return has passed, and
  • a determination is appropriate, following the guidance below, and
  • issuing a determination in your case is in accordance with DMB’s determination strategy, see EM2028.

Whether neither a notice to file nor a return has been issued, check whether you are still in time to issue them, see SAM121080 and CG56100.

A determination is most effective when it is issued with 12 months of the filing date. However, you must normally allow sufficient time for the taxpayer to respond positively to the late filing penalty regimes before you ask DMB to make a determination.

For example, when a taxpayer is liable to penalties for failing to file on time under FA09/SCH55, the most effective time to make a determination is after the 6 month penalty has been issued, but before the 12 month penalty is due, see CH60000+.

Where a return is issued late you should make sure that the initial fixed late filing penalty has been imposed before raising a determination, see SAM61030. However, it is possible to issue the initial fixed late filing penalty at the same time as a determination if the time limit for issuing a determination has almost elapsed.

DMB will only issue a determination if

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • within then last 6 months, the taxpayer has been given a written or verbal warning about a determination for the relevant year, and
  • you have recorded on SA notes when the warning for each relevant year was issued. A standard warning letter will open from this link (Word 26KB).

All determinations must be made in accordance with DMB’s determination strategy, see EM2028.

Time limit for issuing a determination

When a return has not been filed you can make a determination within a period of three years starting from the filing date. For ITSA only, the statutory filing date for all individual or trustee SA returns under S8 or S8A TMA70 is 31 January after the year of assessment. The earlier filing date of 31 October for paper returns does not apply when considering time limits for issuing determinations. If a ITSA return is issued later than 31 October following the year of assessment, the filing date is three months after the date the return is given.

For example, in the case of a 2009/10 return issued on 8 April 2010 with a filing date of 31 January 2011, a determination can be made at any time up to 31 January 2014.

The status of determinations

There is no right of appeal against a determination and the taxpayer cannot seek postponement of the tax due. The determination stands for all purposes as if it were a self assessment unless it is replaced by a self assessment within the normal assessing time limits. The determination is superseded by a self assessment once the relevant return is filed, either within the three year period or within 12 months of the date of the determination, whichever is later. If the return is not filed within this period then the tax charge created by the determination stands.

For the 2009/10 example above, if the determination was made on 30 January 2014, it could be superseded by a self assessment at any time up to 29 January 2015.

We may however be able to issue a discovery assessment under S29 TMA70, when extended time limits apply, see EM3270 and CH51000.

Requesting a determination

For guidance on how to request a determination see EM2029b.

Once you have asked DMB to make a determination you must not make discovery assessment under S29 TMA70, unless

  • DMB are unable to make a determination or
  • You make a discovery after a determination has been issued.